HELSINKI (Reuters) - Nokia, the world’s top cellphone maker by volume, is more confident that it will not need to write down its $8.1 billion Navteq acquisition, a corporate filing showed on Friday.
Nokia bought the world’s largest digital map maker Navteq in 2008 and analysts expected the firm to write off some of the goodwill from the deal, especially after TomTom wrote down the value of its acquisition of rival Tele Atlas.
However the recoverable value of Navteq has improved to 15-20 percent above the value it is carried in Nokia’s books from less than 1 percent higher two years ago, according to Nokia’s annual 20-F form filed with the U.S. securities and Exchange Commission.
As a loss-making business, Navteq’s valuation is highly dependent on growth prospects. Nokia said in the filing there was a “reasonably possible chance” of a change in the valuation assumptions for long-term growth which could trigger an impairment loss.
A year ago Nokia said Navteq’s recoverable value was 5-10 percent over book value.
Navteq’s 2010 sales grew 50 percent from a year ago to 1 billion euros, while its operating loss narrowed to 225 million.
Navteq is a cornerstone of Nokia’s push into services sector, which so far has had limited success against Apple and Google.
In the 20-F report Nokia said in March more than 300,000 consumers were singing up each day for its Ovi services, while there were more than 4 million downloads each day from its Ovi application store.
This is up from 1.5 million 12 months earlier, but still well behind Apple’s more than 30 million.
To better compete against Apple and Google Nokia decided last month to swap its own smartphone platform Symbian for Microsoft’s Windows Phone. The two have yet to agree on all terms of the deal.
The deal was signed by Nokia’s new Chief Executive Stephen Elop, who Nokia hired from Microsoft last September.
Nokia will pay Elop more than $6 million in one-time payments for moving to the Finnish company, the filing showed.
As compensation for lost income, Nokia paid Elop last October 2.3 million euros ($3.18 million), and will pay a further $3.0 million in October 2011, according to the 20-F.
Elop’s total gross base salary is 1.05 million euros, slightly below his predecessor Olli-Pekka Kallasvuo, whose base salary was about 1.18 million in 2009.
Nokia also said its capital expenditure would rise to around 800 million euros in 2011 from 679 million a year.
Additional reporting by Jussi Rosendahl; Editing by Erica Billingham